BEERG Newsletter - EU: A new focus on competitiveness

In her State of the European Union speech to the European Parliament last week, (here) Ursula von der Leyen, president of the European Commission, announced that she had asked the former Italian prime minister and president of the European Central Bank Mario Draghi to take on an assignment to assess the EU’s economic competitiveness, in a bid to improve the bloc’s business climate.

In her speech, von der Leyen cited labour and skills shortages, high energy prices and bureaucracy for small and medium businesses as economic roadblocks. “We need to look further ahead and set out how we remain competitive,” von der Leyen said. “This is why I have asked Mario Draghi, one of Europe’s great economic minds, to prepare a report on the future of European competitiveness.”

If he wants to improve European competitiveness, one thing Draghi could quicky knock on the head are some of the proposed changes to the European Works Council Directive. In particular the proposals to allow courts to impose blocking injunctions on companies over alleged information and consultation infringements, as well as the imposition of GDPR-size fines for inadvertently failing to follow procedures, which are often a matter of interpretation rather than hard fact. These proposals from the European Parliament, strongly backed by the European trade unions, are designed to stop companies from making necessary changes to sharpen their competitiveness. The advocates of these changes may claim otherwise, but this would be the effect if they were to be adopted.

If the Parliament’s proposals were to be adopted, such “runs to court” could become commonplace as the costs involved would have to be footed by the employer. There would be no downside for the EWC in going to court. Win and they are ahead. Lose and they are no worse off. It is a perverse incentive which will only encourage irresponsible behaviour. 

It is very rare that where EWCs exist they are not informed and consulted as required by the law or by the terms of agreements. When unions and EWCs complain about EWCs not being “properly” informed and consulted what they really mean is that management has failed to accept their views and opinions on proposed decisions. They are now searching for ways to enforce their positions on management through the courts.

The European Commission is now waiting to see if the social partners – BusinessEurope and the ETUC respectively – want to negotiate changes to the Directive between themselves, with any resulting agreement forming the basis of legal changes to the Directive. If the social partners decline to negotiate, or if negotiations are opened but fail to reach an agreement, then maybe the Commission should consider putting changes to the Directive on hold until Draghi reports.